How Does Strategic Human Resource Development Lead to Improved Individual and Organisational Performance - Literature review Example

How does strategic human resource development (HRD) lead to improved individual and organisational performance? Introduction Human resource management practitioners and scholars have an ongoing debate regarding the right goals of strategic human resource development (Dash et al., 2013; Okoye and Ezejifor, 2013; Agwu & Ogiriki, 2014). Some have argued that HRD should concentrate on advancing the performance requirement of the organisation by developing the productivity of the employees. On the other hand, some have argued that HRD should centre on developing the individual employees in a more extensive manner without relying on the bottom line results as the acid test of the HRD's significance. Indeed, the question could be rephrased as, 'what is strategic human resource development's dependent variable?' Is it a measurably improved performance of an organisation as the direct outcome of HRD and training, or is it the individual learning or employee motivation? Hence, there seems to be confusion regarding the role of strategic HRD in improving individual and organisational performance. For purposes of removing this doubt, this essay examines how strategic HRD can lead to improved individual and organisational performance. This paper argues that the rationale for human resource development is to improve employee and organisational performance. The thesis statement is anchored in the premise that when HRD improves the motivation level and the productive skills of individual employees, it leads directly to the realisation of the strategic goals of an organisation. Link between Human resources development and organisational performance Human resource development is aligned towards advancing human resource potential to make them meet organisational performance. Okoye and Ezejifor (2013) views human resource development to be the systematic application of tactical measures intended to advance the capacity of the workforce by providing relevant training and career development. Khan et al. (2012) also declare that HRD should be viewed to be innately a sub-category of Human Resource Management (HRM) and that it is intended to advance the productive capacity of the workforce through tactical measures like training and career development. From the two definitions, there is clearly a consensus that HRD consists of the strategic development of the employees within the organisation with the view of enhancing their work practices and performance to enable them to attain the overall strategic goals of the organisations. In the face of such an understanding, strategic development of the workforce today has tended to concentrate on proactive organisational change to enable an organization to survive within an unpredictable yet highly aggressive global business environment. At this stage, it would be rational to argue that human resource development seems to be aligned towards advancing human resource potential to meet organisational performance. Current literature demonstrates the existence of a correlation between Strategic HRD practices and improved performance of the organisation (Dash et al., 2013; Okoye & Ezejifor, 2013; Agwu & Ogiriki, 2014). For instance, a study by Rani and Khan (2014) established that Strategic HRD practices contribute to improved organizational performance. What this show is that HRD impact on the workforce mirrors the perspective that market value is not necessarily reliant on tangible resources. Instead, it depends on the intangible resource, specifically human resources. Indeed, Swanson and Arnold (1996) defined an organisation as a productive enterprise with set goals, objectives, and missions, as well as systems with defined processes for converting inputs into outputs. With the definition in mind, human resource development could be viewed to be a subsystem functioning within the broader organisational systems. As Swanson and Arnold (1996) further highlighted, the purpose of a business enterprise is to maximise shareholder value of wealth by effectively procuring and allocating resources. One of these resources is the human resource. Hence, to enable the workers to contribute to the profitability of the organisation, there is a need to invest the money in developing them. Strategic human resource development, therefore, appears to be linked to the strategic goals of an organisation. In a study by Swanson and Arnold (1996) established a link between strategic human resource development and the strategic goals of an organisation. Hence, it could be reasoned that it is nearly axiomatic that when human resource development is aligned to the organisational goals and objectives, then the organisation is likely to realise these goals and objectives. Here, meeting the goals and objectives become the acid test for the realisation of performance. In the case of Wal-Mart, for instance, the goals of the organisation are return-on-investment, survival, and growth. On the other hand, the goals of HRD are the production of better quality services and goods, having a competency human resource, as well as attaining and maintaining the market leadership status. At any rate, each of the HRD goals is to maximise return on investments. For instance, as Samsung Electronics’ goal is to produce high-quality electronics, its production tends to concentrate on systems and processes that generate quality electronics, marketing promotions that communicate Samsung's high-quality electronics, while simultaneously investing in process and systems that support quality. On the other hand, Samsung's HRD focuses on processes and systems that make sure that the employees in the organisation acquire the expertise, knowledge, and attitudes that can produce electronics that are of high quality. Therefore, when Samsung meets its strategic goals, it could be reasoned that the organisation would have achieved its performance goals. Indeed, Swanson and Arnold (1996) defined performance as the dependent variable through work processes, organisational productivity, and individual employees' contributions to output. Indeed, Swanson and Arnold (1996) clarified that performance can be measured by determining the quality of outputs, the return on investment, cycle time, and rate of return. Therefore, when HRD becomes consistent with a company’s strategic goals, performance becomes the primary means based on which the strategies and goals of an organisation become realised. Link between human resource development and employee performance From the scholarly review, there appears to be a link between strategic human resource development and employee performance (Mohanty et al., 2012; Dash et al., 2013; Okoye & Ezejifor, 2013; Agwu & Ogiriki, 2014.). Indeed, as Mohanty et al. (2012) explains, effective organizations have a committed workforce that makes contributions to the success of an organisation. Jacobs and Park (2009) added that human resource development should be leveraged to support organizational learning so as to attain performance expectations. Therefore, human resource development is primarily concerned with creating strategies in leveraging a learning culture that promotes continuous employee learning. What this implies is that HRD professionals have to come up with an approach that can maximize organizational effectiveness, which addresses the real organizational problems and allows it to attain the learning outcomes In a study by Niazi (2011), the research established a link between strategic HRD practices and learning in organisations. The study established that strategic HRD provides training and development opportunities that enable an organization and its workforce to attain the business goals. They also established that strategic HRD practices also influence organizational learning as they offer organizations key capabilities for enhancing their organizational outcomes linked to strategic HRD practices. What this shows is that employee recruitment and retention is merely a cog in the HRD framework, as it does not guarantee that an organisation will meet its strategic performance goals. In which case, organisations have to capitalise on the skills and competencies of the workforce by investing in learning activities, or even investing in a supportive environment that facilitate creation, sharing and application of knowledge to achieve the organizational goals (Al-Kahtani & Khan, 2014). These arguments are supported by Adewale and Adenike (2013). In their view, improved employee capabilities and skills create future returns by increasing productivity and ultimately organisational performance. An example of an organization that has leveraged strategic HRD to promote employees’ growth and organizational performance is Walmart, a major multinational retail and warehouse store. As currently the largest private employer globally, with more than 2 million employees, Walmart believes in providing recurrent training to employees in order to increase employees’ job skills and to assist them to attain their personal career goals. The company does not view training to be a one-off event. Rather, it considers learning as an ongoing process that assists employees to attain growth in their various posts, stores, as well as align themselves to the organizational goals. To align employees to the strategic goals of the organization, the new recruits are provided with in-depth personal orientations as they get to learn about the Walmart’s history and culture in addition to the roles in the organization (Maney, 2012). Training aligns employee’s skills to strategic goals of an organization Human resource development strategies like training align employee’s skills and competencies to strategic goals of an organization. According to Niazi (2011), training is a significant element of any organization to embed into their business practices. Therefore, training should be viewed to be an investment in employees and their overall growth. When the organization grows, it is of the essence for the organization to train employees on the job skills and policies that enable the employees to perform their jobs at a level that supports individual employees’ growth. Agwu & Ogiriki (2014) share a similar perspective in their argument that human capital is essentially an important component that plays a fundamental role in organizations as well as leads directly to organization success or failure. Training helps in creating the right skills and attitudes needed for attaining organisational goals and performance. According to Niazi (2011), training and development consists of the necessary processes for obtaining or transferring knowledge, skills and abilities (KSA) necessary or carrying out specific tasks and activities. Training is a sub-set of HRD. According to Saad et al. (2013), as employee training and development tends to be inherently strategic, it can be harnessed to address business challenges, whether at present or in future. Basing on these perspectives, it could be assumed that HRD practices directly or indirectly improve organisational performance as it improves the skills, attitudes and behaviours of the workforce. Several studies have established a link between strategic HRD practices, such as employee training, and improved employee motivation and commitment and greater organizational productivity (Sthapit, 2010; Agwu and Ogiriki, 2014). In a study by Agwu and Ogiriki (2014), the researcher did a case study of Bonny, a liquefied natural gas company in Nigeria and established a link between strategic HRD practices, such as employee training, and improved employee motivation and commitment and greater organizational productivity. In another example, Walmart has invested in training and development, such as through the three-month Manager in Training (MIT) program. The training program is intended to give trainees exposure to the extensive variety of Walmart operations across its global chain. Employees can apply for the MIT programme. Once the trainees complete the programme, they can apply for the position of assistant manager. According to Walmart, by investing in search training programmes, employees are provided with an opportunity to work at all levels of the organization. The company believes that the training provides employees with an opportunity to continually improve their performance and to focus their energies on strategic organizational goals, including performing better than the competitors. According to Walmart, the goal of training is ensuring maximial employee exposure to learning activities depending on their areas of specialisation (Maney, 2012). Motivation determines improved employee performance Strategic HRD improves employee motivation, leading to better individual and organisational performance in the long-term. In a later study by Tabassi et al. (2011), it was established that improving employees skills directly affects employees’ their attitudes commitment, motivation, and satisfaction. Regarding motivation, a growing body of research have shown that motivation is a key determinant of improved employee performance (Tabassi et al. 2011; Dash et al., 2013). According to Dash et al. (2013), Strategic HRD practices have shown that employee motivation is in the organizations best of the organisation, as it enables employees to stay longer in the organisation. The finding may be interpreted to mean that strategic HRD is linked to employee retention. It also makes sense to argue that when HRD enables an organisation to retain its top talents longer, it means the organisation would sustain its long-term performance. It could further be translated to mean that when employees’ are motivated, it leads to few cases of absenteeism, which leads to greater productivity. However, these also indicate that individual and organisational performances depend on the individual employee’s perceptions and expectations. The view is supported by Agwu & Ogiriki (2014) when he observed that employee behaviours and attitudes reflect their individual expectations and perceptions. This perspective is also supported by Campbell’s (1990) ‘job performance theory,’ which states that the attitudes of the employees affect their individual behaviours that sequentially influence organizational performance. Scholarly literature has also demonstrated that employee turnover depends on organizational commitment, motivation, and job satisfaction, as no employee is likely to commit himself to stay in an organisation over a long-term period when unhappy with the working conditions, or when the organisation fails to provide opportunities to help the employee to improve his overall performance and satisfaction level (Jacobs & Park, 2009). While it can be argued that satisfaction, as Agwu & Ogiriki (2014) explains, precedes employee motivation and commitment, it could be reasoned that organizational motivation, job satisfaction, and commitment are intrinsically interrelated. Walmart uses human resource development to motivate employees. After the initial orientation program, the department of the new recruits is assigned to provide training and development. As Walmart is a multinational corporation, it ensures that its entire training and development practices are as well global in nature (Maney, 2012). Indeed, Walmart states on its website that it provides many training opportunities to assist managers to hone their leadership skills, advance through the ranks in the company leadership ladder and keep motivate their teams to fulfil Walmart’s mission running strong. Examples of the training programs at Walmart include Assistant Management Training (AMT), which is a management-training program that any salaried employee of the Walmart Stores can enter once his application into the program is accepted (Maney, 2012). Conclusion The rationale for human resource development in an organisation is to improve employee and organisational performance. When strategic HRD improves the motivation level and the productive skills of individual employees, it leads directly to the realisation of the strategic goals of an organisation. As established in this paper, strategic HRD aligns human resource potential towards meeting organisational performance. Strategic HRD practices like training also align employee’s skills and competencies to strategic goals of an organization. In turn, training helps in creating the right skills and attitudes needed for attaining organisational goals and performance. Strategic HRD also improves employee motivation, in turn leading to better individual and organisational performance in the long-term. This is because strategic HRD enables organisations to retain its top talents longer and sustain its long-term performance. Reference: Adewale, O. & Adenike, A. 2013. Impact of organizational culture on human resource practices: A study of selected Nigerian private universities. 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